On an initial read, most people would see a decrease in credit card debt as a good sign. But as the follow Forbes article points out, this was an artificial decrease by way of charged off accounts. In fact, charge-offs increased by 300% over a 4-year period from 2006 to 2010.
So it’s not necessarily a good thing that the debt is down. The banks took one on the chin and now they’ll try to recoup the losses. The article paints a gloomy, but realistic picture of where we are headed. As the economy improves, banks will begin extending credit to riskier individuals (a trend we are already seeing). The debt levels will rise again and eventually, the bubble will burst. Couple that with the growing student loan debt and we’re headed for difficult times. Stay tuned and pay attention to the campaign during this presidential election year. Student loans are sure to be a hot topic and it will be interesting to see where our prospective leaders would like to take us over the next four years.